How does your home equity affect your student’s financial aid? And what do the following words all have in common: tedious, cumbersome, difficult, time-consuming, and sometimes expensive? They are all words which can describe the “College Scholarship Service PROFILE” or CSS/Financial Aid PROFILE® offered by the CollegeBoard.org and your home equity plays a role. Not to worry, we have you covered.
The CSS PROFILE is used by almost 400 colleges nationwide in addition to the FAFSA to determine your student’s financial aid availability. Why should you care? Because the most prestigious colleges in the country use this application to decide whether your student will receive aid to their schools AND because these schools have billions of dollars available to award to students AND because these schools will cost you in the six figures. You’ll want to try to qualify for as much aid as possible!
Here are 9 things you should know about the CSS PROFILE so you can "Know Before You Go":
1. Almost 400 colleges require the PROFILE. When researching colleges make note if your desired school is one of them. Here’s a listing.
2. The PROFILE will require more detailed information about the parent’s and student’s finances. Take some time before starting to gather needed documents like current and previous year’s tax returns, W-2 forms and records of income, records of untaxed income, bank statements, and records of savings, stocks, bonds, trusts, etc. for both the student and the parents. Sometimes schools may request copies of documents via the IDOC (Institutional Documentation Service). Completion of the PROFILE is not as quick as the FAFSA so set aside a block of time to do it.
3. CSS PROFILE deadlines can vary by university so you need to check with the school for their deadline. Some are as early as October 1st of your student’s senior year of high school. Some schools will request them very early so that they can put together your financial aid package alongside your admissions acceptance.
4. Unlike the FAFSA which has “free” in its title and does not cost anything to file, the PROFILE is NOT free. The initial application fee is $25 and includes one college. Additional colleges are $16 each. Waivers are available for low income students.
5. Carefully review your information before submitting the PROFILE. You can NOT make changes after submitting, with the exception of updated tax information after you have filed. Also know you can add colleges later, but you cannot delete them. So review, review, review before submitting.
6. Parents can create a separate log in from their student’s account. Also if you have multiple students applying to the same college, they each need their own account.
7. As we discussed in a previous blog post, a family’s expenses (mortgage, medical, parent’s student loans, & high school tuition) become part of the overall picture with the PROFILE so a college can get a more detailed glimpse of the special circumstances surrounding your financial ability to pay tuition at their school. In contrast, the FAFSA does not take into account family expenses at all. If you have “special circumstances” you will want to notify each school that only uses the FAFSA.
8. In most cases, the custodial parents, the ones the student lives with the most, are the ones who report their financial details. Custodial parents may include step-parents, adoptive parents, non-married parents, and guardians. Most universities utilizing the CSS Profile will also require financial information from the non-custodial parent and request a supplemental application to include both parents regardless of marital status. As you can imagine, this can have a significant impact on the family's expected family contribution (EFC).
9. Finally, what about your home’s equity? Some schools will use your home equity against your student’s financial aid, and some will not. Think of it this way...schools using the “Institutional Method” to determine your EFC have discretion over how much or how little of your home's equity they expect you to use towards the cost of education. This idea may seem crazy to you, but better you know ahead of time. Also, this number can change from year to year and from institution to institution. Your best bet is to call the financial aid office and simply ask if they consider home equity as a resource to pay for college, and if so, how do they determine this amount. Oftentimes, the home equity value is limited to a multiple of your Adjusted Gross Income (AGI)--for example, a maximum value of 1.2x your AGI.
Elite universities have elite levels of endowed aid to award to those who are eligible. Qualifying for that aid can be difficult, but completing the CSS PROFILE will get you started.
Our soap box…Remember the cost of these elite schools can be prohibitive. Your student’s academics may get them in, but the costs may be a road block. Cast your net a little wider to look for those “Unicorn Universities” we discussed in our earlier blog!